If you haven't read the Inside Radio interview with John Hogan, the Clear Channel Boss, you must. It will give you CC's direction for the coming year(s). It is frightening.

Author: Tomparker
Thursday, January 29, 2009 - 8:19 pm

Isn't Inside Radio owned and operated by Clear Channel?

Author: Hwidsten
Thursday, January 29, 2009 - 9:04 pm

Hi Tom,

Yes it is. Hogan got to say whatever he wanted to say. I had to Read it a couple of times to believe what I was seeing.

Author: Tomparker
Friday, January 30, 2009 - 7:29 am

Here's Jerry Del Colliano's blog take on the Hogan interview (Part 1)

There's a reason radio executives are talking gibberish and not making any sense even as their industry fights for survival.

Come on.

Sales shortfalls can be solved.

Programming inadequacies can be fixed.

New media and mobile content can be our fast friend -- not that complicated.

If we know this, why don't the radio CEOs know it?

And the answer is -- they do, but their problems are much bigger than increasing sales or getting ratings.

Radio is over -- not because sales and programming can't be fixed -- but because the station's can't service the debt consolidators gleefully took on to put their groups together.

Now they're panicked -- I've used the word "panic" before and some may think it was for dramatic effect. But I mean it -- they are terrified, in a cold sweat, in a flap, in a fluster, in a tizzy.

Maybe you can even find it in your hearts to forgive Clear Channel's John Slogan Hogan for defending the firing of 1,850 employees recently. Then, less than a week later Hogan says that they also may be hiring.

What's that all about?

When Hogan tells Inside Radio “We’re going out and hiring real revenue and yield management expertise”, he's not fooling anybody?

Hogan's scared out of his mind. I don't know about you, but he's starting to scare me.

What do good radio people know about hiring revenue and yield management expertise? Hell, many don't even know what it means. They don't need to. They know how to make radio profitable. Don't go asking Bain Media consultants what to do.

Radio has always been a simple business -- and that's its beauty -- screw yield management. Stick to your rates. Stop selling cheap ads. Triple your sales force, don't cut it. Put a killer sales manager in who knows how to sell local radio. I believe even Hogan knows this.

So why, you ask, would he start talking "Bain babble" -- named after Bain Media -- Clear Channel's co-owner and apparent management savior?

Hogan has a five-year contract and if he has been paying attention to the "long-term" contracts Lee & Bain have been offering "key" executives, it's not worth the paper it's printed on.

When a radio guy spits out the company line that Clear Channel is looking for a more "methodological and mathematical" way to determine rates and commissions, you know Hogan has gone off the ranch.

When he says, “I can’t tell you if the reductions are done, because frankly I don’t know", I believe him. No one is asking radio people how to run their own business these days. Hogan answers to a higher power -- private equity -- and gets his instructions from them.

When Hogan talks about re-engineering the company, he's full of horseradish to put it nicely.

Look, let's put it out there -- real.

Consolidated radio groups are facing bankruptcy because some will not be able to restructure their massive debt -- the debt they acquired in the first place when they paid too much for overvalued radio stations.

No one worried about it then.

But now, it's time to pay the piper.

Why else do you think radio people who know better are hunkering down for what they know is coming -- default.

One reader, a radio executive, claims New York money types are not just talking about the possibility of radio groups defaulting, but the probability.

Some think it can happen within six months to a year.

Radio groups like Cumulus, Univision, Clear Channel, Entercom -- in fact, most of them -- have structures that make it difficult to survive if debt cannot be restructured. And in case you haven't noticed, money is hard to come by these days.

Viacom CEO Sumner Redstone's "short pants" make life precarious at CBS where I'll bet Les Moonves would sell the entire radio group if he could get a decent price. Hell, he can't sell most of the CBS Radio stations he previously put on the block. No one wants them -- at least -- not anywhere near the price CBS paid for them.

Radio groups are more susceptible because they are leveraged to such a high degree. That's the reason that the stock prices are so low. Shareholder equity is zero as every single penny of cash flow currently goes to servicing debt. Soon, they won't be able to service the debt and/or they will be in violation of covenants with the banks and/or equity lenders who will seek to take the stations back.

And if you're seeing blue skies in all of this -- like, the stations will be more affordable and groups of former radio people who know how to run them can now become buyers -- wait. Consolidation has run the radio business down and competing in this environment could jeopardize even these re-purchases. continued next post

Author: Tomparker
Friday, January 30, 2009 - 7:31 am

Jerry del Colliano part two

The erratic behavior you are witnessing when bad things happen to usually good radio people is the realization that their gig may soon be up.

That's why you're seeing outlandish deals crafted to bonus CEOs as an enticement for signing an employment contract renewal when no bonus would be necessary. I mean who is going to steal Lew Dickey away from Cumulus? Does he need an $8 million pot sweetener? Let him leave for $7 million. Betcha he wouldn't and couldn't.

How about Farid Suleman's tax-free $11 million salary in 2007 (we're anxiously awaiting 2008 figures and expect his compensation to be just as outlandish). Is he just taking the money, the plane, the benefits while he can because even a bean counter knows what an 18 cent stock is going to get you, eventually?

Fired.

Employees who have lost jobs are scratching their heads wondering how did so many group execs forget how to put billing on a station.

Or, forget that radio works best when it is local.

The reason Clear Channel is gutting the company like my favorite fish monger in Toms River, New Jersey guts a fluke is because they know something their employees don't know (or don't want to know).

Consolidators put too much on their credit cards and you know what happens when you owe more than you can pay back. Consolidators have been doing it with mirrors for years now -- refinancing debt. The average person doesn't concern themselves with it. Wall Street-types are obsessed.

Radio was a business that never had "consolidation" in its future. It was a small, family-owned service that made a nice living for some and losses for others. But there was a prestige in owning radio stations. That's one reason why mom and pop -- or even Jefferson Standard Insurance and Nationwide -- wanted stations in their portfolio.

When the big deals were getting done in the mid-90's, I asked a friend of mine on Wall Street how these companies could manage the massive debt they were taking on. He told me then -- and reminds me now -- that they can't.

So, my friends, if it helps get all of us who care about this industry closer to acceptance of what is happening, the nonsensical decisions that are being made by not-ready-for-prime time radio CEOs are just holding off the inevitable.

And that is -- stations in default.

My GM, sales and programming friends always say they know how to fix the problems at local radio stations.

But the reality is that no one can fix the mess that consolidators and eager investment bank lenders got the industry in when they propped up a business that looked good for a while to investors but never had a chance because of unmanageable debt.

And, to borrow a phrase from the great Paul Harvey -- now you know "the rest of the story".

I remember when I first got into the business. That a lot of stand alone stations were nothing but a tax write off to the owner. Similar to Bob Pamplin. But on a larger scale across the board.

Author: Billminckler
Friday, January 30, 2009 - 7:50 am

I read Jerry's blog almost every morning. (He gets waaaayyy too deep for my interest on the music industry stuff.)

But the radio insight is thought provoking.

But the overall description of the business is too negative day to day to day. On some mornings I don't read it because I want to think positively about radio's future. The future is challenged for sure. But somebody is going to do something positive with a stick or two over the next few years.

And I sure as hell wouldn't post the details of exactly what those positives are on a blog. There still has to be such a thing as a competitive advantage!

(Except to say that I would hire Tom Parker and consult with Hal Widsten.)

Author: Lundun
Friday, January 30, 2009 - 8:01 am

Since I refuse to spend one penny on the great Satan that is CC, and will never subscribe to Inside Radio, can someone please outline the gist of Hogan's comments beyond the bits and pieces in Colliano's blog?

Thanks

Author: Hwidsten
Saturday, January 31, 2009 - 7:44 am

There are a lot of things that Jerry says that I agree with, but there is his overall theme that Radio is dead, and I do not come anywhere near close to agreeing with that. In fact, I wish he would just say it and shut up. This constant negativity that Bill mentions is not helping the business or any of us in it.

Look, here's the way it is. The Wall Street people were sold a bill of goods by CC that they were going to get double digit revenue increases every year and they went out and sold that to their investors. It didn't happen...doesn't matter why....so they have spent the better part of 8 years trashing our business publicly. It hurt our long-term relationship with advertisers and negatively influenced the young agency people.

The Sirius/SM Satellite people have been trashing us, thinking they were going to rule the world, for the past 8 years while running up huge debt and not capturing anywhere near the audience they thought they were going to accumulate. But, it didn't help.

The Internet people have been trashing us, saying that wi fi and on-line stations would take us out, instead discovering that music performance fees have taken them out, and you can't drive anywhere and receive a consistent broadband signal....underline the word consistent that is anywhere near what Radio provides.

We've lost a lot of good Radio people...many of whom were bought out by the consolidators, and many of whom went elsewhwere because their salaries were cut, and in all honesty, that is probably what has hurt the most.

But, we still command the largest audiences in the US. The People Meter....the first true measure of Radio listening that will be a measurement, not a vote...shows that our audiences are actually larger than the diaries every showed. And in the last three years, the Radio audience has grown. You skeptics can look that one up. Anybody heard anything....anything...about Howard Stern? Howard who? He has fewer people listening to him now than he did in New York....by a bunch. And what happened to the great internet Radio....ooohhhh I'm afraid. These broadband guys can't make my wireless local area network in my house work right, let alone carry the 30 some San Antonio stations to every part of our city and across Texas.

It is time for us to quit being negative. In 5 years there won't be a Clear Channel, but you young guys in the business will still be here. It is time you stood up, brushed yourselves off and started doing something for yourselves and the business we all love.

If your station sucks...maybe you're part of that. If you can't do what you need to do, it is time to begin sending out audition audio and resumes. There are other choices outside the top 30 markets.

There are over 12,000 Radio stations in the US, and Clear Channel only owns 800 of them. There are many more stations owned by people who have two or three than there are companies of 800. Not all of them are in big markets where you can make 6 figures, but how many of you reading this have made 6 figures in Radio?

There are places in this business where you can do what you enjoy....get to be creative....own a house....build friendshps....raise a family....make a good living and never worry about CC, or Arbitron. You can be a big fish in a small pond and have fun doing Radio.

There are still many owners out there who respect talent....believe in local news coverage and do sports play by play and make money doing it. I personally know 100 of them in the Ideabank organizaion.

If you want to own a station, finding money is tough right now, but there are many owners who want to retire and if approached properly by a sincere Radio professional might agree to finance part of all of a fair purchase price. There are some good facilities available where a Radio guy who is a good programmer and understands what people want can build a station to be proud of and a good life along with it.

Even though we're going through some uncertain times right now, there is opportunity out there. To take advantage of it you can't just sit around and be negative. You have to seize the moment. I hope you will.

Author: 1lossir
Saturday, January 31, 2009 - 7:57 am

>>There are a lot of things that Jerry says that I agree with, but there is his overall theme that Radio is dead, and I do not come anywhere near close to agreeing with that. In fact, I wish he would just say it and shut up.<<

This is nothing new for DelColliano. He's the ultimate Chicken Little of radio. He was this way when he owned Inside Radio and now he's even worse.

If people who read his "blog" daily really believe things are as bad as he says - it will become a self fulfilling prophecy.

Author: Markandrews
Saturday, January 31, 2009 - 9:51 am

A **LOUD** STANDING OVATION FOR MR. WIDSTEN!!! That is simply eloquent!

And to 1lossir, I'm afraid you're dead on with that self-fulfilling prophecy. After all, the sheep that run the big conglomerates are proving it right now...

Author: Tomparker
Saturday, January 31, 2009 - 12:51 pm

Hal is, and has always been, eloquent.

Radio is not over. What is over (soon) is the era of reckless consolidation and the operators who financed beyond their ability to pay back.

Think of what happened in residential real estate. Now imagine 3 companies bidding against each other to buy every neighborhood they could with a high class version of subprime loans. Didn't matter how much they paid for a house, as long as the other 2 companies didn't get it. Plenty of happy sellers.

Oops, now they can't pay back the loans and the houses aren't worth a tenth of what they bought them for. Does the next buyer care what the companies paid for them? Nope. They are only interested in intrinsic value.

Back in the 80s the banks were very interested to know how radio stations would pay them back. In the 90s finance came from stockholders who had no expectation to be paid back, just those double-digit projected returns.

When the dust settles there will still be reasonable profit margins to be made by successful broadcasters who understand the business and use sound financial judgement.

In the meantime, row clear of the Titanic known as The Big Consolidators, lest they pull you down too.

Author: Stevethedj
Sunday, February 01, 2009 - 9:06 am

Good points Tom. I have worked for about six stations that were mom and pop later sold to the the big three or another chain. After the staff meeting where we were "thanked for our loyal service" and paid our final check from them. On the way out the door. Several mumbled how they could not figure how they were going to pay for this. And one mumbled what a bunch of suckers(the new owners). Note most of this took place over ten years ago.

Author: Joe_ferguson
Sunday, February 01, 2009 - 10:34 am

Some rambling thoughts triggered by this thread.

Minck says..."I would hire Tom Parker and consult with Hal Widsten."

That happening would represent a substantial opportunity for an aspiring AE Type.

Tom Parker is correct when he said "When the dust settles there will still be reasonable profit margins to be made by successful broadcasters who understand the business and use sound financial judgement."

There are examples out there now, and not just in small markets. Read up on WBEB, in Philadelphia. It's a monster in ratings and revenues. Why the big guys don't emulate them is a mystery to me.

It's easy to get caught up in impression that all radio is ready to fail because of the exposure that the big guys get. For the sake of the industry, I just hope the dust settles a bit more quickly.

Maybe The fact that people are saying these things is a good sign. For the longest time, most just accepted that things really would get better. We were told "just because you don't understand the matrix that was debt, cash flow, EBITA amd ROI didn't mean it wasn't viable. Just continue to do your job."

Then there was the blindingly insightful comment by Mel Karmazin that "the only thing wrong with the radio business was that all the sales people needed a swift kick in the ass."

I know that certainly endeared him to me.

Author: Billcooper
Monday, February 02, 2009 - 9:58 am

This business would have been a lot better off if the likes of Hal Widsten, Bill Minckler, and Tom Parker were in positions to make key decisions back when radio deregulated and lost its way. I agree with all of them that radio is far from dead. "They" have tried to kill us time and time again and radio has always survived. We will survive this as well.

I also agree with Mel Karmazin that "sales people need a swift kick in the ass". Sales types and management have needed that kick for a long time. I have vivid memories of the lunch that Jacor put on at the Portland Hilton Hotel for advertisers when they announced the launch of 620K-News. Randy Michaels tried feeding them a load of bull about how consolidation would be good for them, and that as soon as President Clinton signed the deregulation bill they were poised to buy hundreds, if not thousands of stations. They had all of us from KEX and K-NEWS scattered around the room for show. I remember one big car dealer leaning over and asking me "so how does one company having a monopoly equal a good deal for me?" of course it wasn't a good deal for advertisers at all.

Author: Billminckler
Monday, February 02, 2009 - 11:58 am

Bill, thanks for the strokes but I, for one, didn't understand the nature of consolidation, such as it was when Trumper added Q105 to K103, then sold to Citicasters which then rolled into Jacor which became Clear Channel.

One of our saving graces (up until September 2003) was that our group of stations was a long way from corporate, both literally and figuratively. They finally figured out that we pretty much ignored everything they asked us to do that we could get away with and threw our asses out! At the time it didn't make sense to us (throwing us out) because pretty much all was running very smoothly and the economy was good. But they did get their own team. What I got in return was normal blood pressure.

If we were all still there (and alive) we no doubt would've had to deal with the layoffs and cutbacks ordered up by corporate.

There are still some very talented folks at the various clusters around town and I know they will begin to sort things out in time.

The business has always been in some sort of turmoil or other. Can you imagine what it was like being a member of a studio orchestra when turntables were introduced?

The first company I ever worked for back in 1968 mandated that certain songs not only not be edited and played but could not be played at all under any circumstances because of drug or sex references. (We played 'em anyway.) That was Time-Life which in my opinion was one of the best two companies I ever worked for (the other being King Broadcasting). They also had no overtime policy (God bless them!) so it was easy for the PD to add hours to a time sheet and in affect get us a raise when a salary freeze was happening.

I expect some good things will be happening soon, both in the Northwest and around the country.

To Hal: Don't give away all of your secrets here. I want to come and have a serious sitdown with you. By way of compensation I will treat you to some of the best damned ribs in the world! Maybe even breakfast at that flour mill place in San Antonio.

Author: Joe_ferguson
Monday, February 02, 2009 - 2:38 pm

Bill Cooper said "I also agree with Mel Karmazin that "sales people need a swift kick in the ass". Sales types and management have needed that kick for a long time."

Obviously, you did not recognize my level of sarcasm in that comment. It is not now, nor was it ever the sales people who needed the swift kick. Perhaps a few managers who drank the kool-aid, but I think the kick should be delivered to those higher than the station level who agreed to this wacked out model of how to run a radio broadcasting company. And, maybe the kick should be to the head instead of the other end.

Of course, the above is only my opinion. Be it ever so humble.

Talk amongst yourselves.

Author: Craig_walker
Monday, February 02, 2009 - 4:51 pm

Mink, Can I join you and Hal for those ribs? That's a conversation I would really enjoy being a part of.

Author: Hwidsten
Monday, February 02, 2009 - 7:21 pm

The salespeople are getting hammered just like everyone else right now at Clear Channel. Because these people have never actually run a Radio station, they don't understand that there are three parts to every sales department. There are the top billers who have been around for a while, developed the relationships with the agencies and the clients who spend the big dollars and bring in the base billing. Then there are the mid-pack people who don't have the great lists, but who are the most aggressive and, if properly supported and directed, can develop into the top billers. Then there are the bottom feeders. They are new, inexperienced, trying to figure out if they can do this, trying to learn who they are, etc. Some of them become mid-pack....many fail.

It is the sales manager's function to develop a balanced department that has lots of the first two types and continues to hire and fire as necessary to bring in newbies for the future.

Clear Channel's latest brainstorm....supposedly from Lee & Bain...is to determine the ROI on all employees. This is most easily done in the sales department. Their mistake is firing the top billers who they think are lazy and splitting up their lists so no one can make a good living. They have also fired all the bottom feeders, so....like their philosophy concerning talent....there are no new people to promote.

I know a CC salesperson whose commssion has been cut 5 times in the last two years. He has a wife and family and has been one of the big guys, but even with the good list he has it is becoming tough for him to make a living. He has worked for them for over 10 years. No one who has made that much money for a company and continues to perform should be told he is making too much money and essentially have his pay cut.

Don't go off on the salespeople. They are suffering, too. They just don't have a place like this to talk about it.

Author: Hwidsten
Monday, February 02, 2009 - 8:47 pm

Bill,

Ribs are best at the Grist Mill in New Braunfels, and breakfast at the flour mill works for me. I'd be 20 pounds lighter if it wasn't for the best Mexican food in the world right here in SA.

Author: Billcooper
Monday, February 02, 2009 - 11:47 pm

I know that there are a lot of hard working and dedicated sales types who are being hammered by the companies they work for...and I'm not trying to kick them while they are down. Its management and ownership at the mega-corporate level that really needs the kick.

Hal..as you know I have friends in SA. I've been to the Grist Mill in New Braunfels. Good stuff indeed. Lets all meet Hal and Minck there for a feast!!

Author: Roger
Tuesday, February 03, 2009 - 5:45 am

The last place I worked had a policy than after the first contract renewal, the client became a "House Account". Unfortunately, the HOUSE never serviced them, and the original sales person was supposed to handle them with no compensation while developing new business. Gee, new business with commission, or established client that needed time but no pay for the contract..... Might be a problem..... Nah, if it was, a sharp station owner would see an advantage to a top producer with an established list is like money in the bank........ Another case of trying to sit on a two legged stool...... Big box radio sure likes that concept.

Author: Hwidsten
Wednesday, February 04, 2009 - 6:00 pm

Admittedly, there are some Radio people out there with some strange ideas. I know one very successful operator who sells ads in 5 second increments. He runs spots of strange lengths, but he sells a ton of them and makes a lot of money. In that station the only person who can call on new accounts is the Sales Manager. When he adds enough accounts to create a new list, they hire a salesperson to call on them....and only on them. They pay 20% commission. The lists are limited to 60 accounts and each salesperson MUST communicate with all his acounts every week. Different...right? Not the way I would do it, but like I say, they make a lot of money with almost no turnover. and no personnel reductions in these uncertain times.

Author: Ourproductionguy
Wednesday, February 04, 2009 - 9:57 pm

I feel awkward in responding to this thread, because Hal, Bill and Tom are so well versed in their responses. However, I have been saying for the past ten years or so, that the real broadcast professionals seem to be absent from the scene today. I can still hear Charlie King, Sales Manager at KGON/KYXI walking through the sales department bellowing, "..don't insult me with no $500 order. Don't come back until you bring me some BUSINESS!" Today, I hear the sales people lamenting that their clients tell them radio doesn't work.

REALLY?

My first radio job was on the air AND selling. My GM sent me out to call on the "impossible client". The client told me that radio didn't work, and he was staying with his newspaper ads. I told him I would give him ten free ads, but that I would say that his business was going to be closed for the day. "You can't do that!" he said. But, if radio doesn't work, what's the harm?

We see the same scenario played over and over in other businesses. Circuit City had a lot of sales people who were making a lot of money. Management decided to fire them all, and replace them with people who made less, but didn't know anything about the products they were selling. Circuit City is now going out of business.

The folks like Hal, Bill, Tom, Craig and many others who know this industry inside and out, have been replaced by the accountants and legal departments who know nothing about radio.

How many up and coming radio programmers know about audio processing to maximize impact on the listener? Do they care about ripping CD's Vs. a live mix?

Have they ever heard of Arthur Godfrey, who's success in radio was based on his ability to communicate to ONE LISTENER, not "EVERYONE"?

The folks who have responded to this thread understood the very basics of how to communicate to the individual listener, and that's why they were so succesful in the first place.

Today, the folks who run radio would look at me like I'm speaking a foreign language for saying this.

Radio can and will survive, but only when we once again have people in programming, sales and management who really know how to communicate one-on-one with a single listener. How many broadcast schools are in business today? Is there up and coming talent to replace us?

I'm afraid I'm reading posts from some very knowledgeable professionals, who are rapidly being replaced by bean counters and statisticians.

Geez, I hate to be negative, but vinyl really DID sound better than CD...the Drake format really DID sound good...the passion we have for KGW and KISN and KINK from the good old days is not shared by today's radio listeners.

In the meantime...the checks come twice a month, and they still clear...

Author: Missing_kskd
Wednesday, February 04, 2009 - 10:15 pm

"must communicate every week"

That's an extremely good thing to be doing right now, just from a business perspective! We regularly do this, on a rotating schedule. It's tracked and everything. We've ramped it up in response to this very tight economy.

Nobody is buying anything big. That's a given right now. However, they are buying where they see value. Everybody is looking for that little edge. Give them that incremental value and they are happy to pay for it.

Probably they are using it, trying to make their own plans work. In turn, we take their data and work on offerings that are better aligned for the times. It's a good cycle, and it's not all that hard to do really.

Where it does not occur, accounts are lost, issues develop, competitors get in there and pitch. Incremental revenue is lost too. That's probably revenue that keeps the lights on. Bit by bit, it's hard to notice. At the end of the quarter, it adds up pretty huge.

Regular communication adds a lot of value. Also, and this might be related to the radio station experience, if you are there and available, they will often tap you for ideas, and you become a part of their process.

That always turns into dollars, and that's part of the cycle as well. I would be willing to bet a lunch with one of those salespeople would reveal a solid relationship sell. Those are very hard for competitors to crack.

In these times, that's worth gold.

Good move, IMHO.

I think the potential for passion for radio is still on the table. It's there, it's strengths haven't changed. When the management issues pass, probably things can pick up.

As a listener who really enjoys good radio, I'm just looking forward to that. And it's there in bits and pieces sometimes. It's good to enjoy those, when they come and while they last.

Author: Missing_kskd
Wednesday, February 04, 2009 - 10:25 pm

On employee ROI...

Yeah, that one really sucks.

Let's say the relationship sell is in play. You've got top people that can really close, and depending on the enterprise, people that are project people, idea people.

Finally, you've got the lower level people.

If you look just at dollars produced in terms of deals and who closed them, it's pretty easy to think that the juniors are not doing much, and the top dogs have it easy.

However, if you look at just your cost of sales, and revenue coming in, the picture is a bit different.

The juniors are good for starting and finding those potential relationships. When they do, they've got better people to sell. In our business, selling people is a very big chunk of what we pocket each year!

(we sell other stuff too)

So, if you are selling air time, that's mostly people! It's all services, to produce something that's really as service if you look at it hard enough.

Your idea people and top people can take those smaller relationships, and build on them. They are the people the juniors actually are selling in a lot of cases.

Once a relationship builds, the junior follows it, selling the higher level people, until they can put together larger deals. This is how the engine builds.

If you lop off the top and bottom, what you lose is the pipeline, and instead of a steady funnel of potential opportunities, you end up just hammering on the known ones, bleeding them dry.

Discounts and other incentives escalate and that does what?

INCREASES THE COST OF THE SALE. So margins are down, and overall revenue is down, and OPPORTUNITY COSTS are THROUGH THE ROOF. Ugly. Add that all up, and perhaps those people did deliver something! (of course they did)

Repeat a coupla times and you've got a very ugly cycle in play. Relationships get hurt, and the whole thing dies over a few years, with most people wondering what happened?

What happened is others established their own relationships, proved out their value and had the talent in the building capable of putting together more competitive deals.

That's what happened.

Anyway, that's really the counter point to employee ROI. It's a non-holistic view of the enterprise that does a lot more harm than good.

Author: Roger
Thursday, February 05, 2009 - 11:26 am

.....and the whole thing dies over a few years, with most people wondering what happened?

And yet, some supposedly VERY smart people with MBAs are proving to be not as smart as the people in the trenches.... the ones the MBAs let go....

Author: Missing_kskd
Thursday, February 05, 2009 - 11:34 am

Rule #1 for the MBA. Cut costs, and push risk away from you.

That's how it happens.

Author: Hwidsten
Thursday, February 05, 2009 - 7:22 pm

Missing kskd has it figured out, and we all get to watch it happen to CC. Under the new philosophy a few of their stations will do better, and at those that don't the "methodology" will be adjusted until there is a kind of paralysis in the organization. Then we'll watch as CC ever so slowly begins to implode. I give it 5 years tops...maybe less.

Author: Roger
Friday, February 06, 2009 - 5:45 am

They won't have the patience to wait 5 years.

Author: Notalent
Friday, February 06, 2009 - 10:04 am

I believe the private equity groups plan to be out in 5 years... thats all they need to make their ROI.

this is just a 5 year deal for Bain/Lee from what I've heard...

then CC goes public again and the merry go round starts all over.

Author: Roger
Friday, February 06, 2009 - 10:46 am

No, Bain will gut the company first, That SOP came into vogue in the 80s. Buy the whole, sell the parts for more than the IP.... basically leave the wreckage for someone else to clean up.

Not unlike a superfund site.....

The greed mentality has to go. Maybe teach that to the young.

Author: Tomparker
Friday, February 06, 2009 - 11:10 am

If we all remember recent history, Bain tried to leave CC at the altar, but the lawyers showed up with shotguns.

The numbers they ran were not the numbers that were in place when the nuptials took place.

Then came the epic meltdown of the business model. I don't think they can part this one out.

Author: Roger
Friday, February 06, 2009 - 4:12 pm

Yes, I remember them trying to back out.... banks too didn't want to finance it.... Now we bail out the banks, and Bain eats their overinflated purchase price? Maybe if they had been familiar with the business of broadcasting they would have said thanks but no thanks... Wow if anyone within the company would have checked in with any of the dozens of radio chat rooms they would have picked up on the theme that maybe the big companies were breaking the mold that made radio station ownership successful overall.

Wanna buy a 1906 nickel for 100 bucks?

Author: Hwidsten
Friday, February 06, 2009 - 8:42 pm

As you know, one of the main reasons people like Lee & Bain buy these companies in the first place is they believe there is more value in the parts than in the company as a whole. It will be interesting to see if they can extract that value in a reasonable period of time.

Author: Missing_kskd
Friday, February 06, 2009 - 10:22 pm

I never did like these kinds of transactions. Sometimes it makes great sense. In this case, it's a problem. Heck, the whole merger deal was a problem. Everybody knows that.

So, I'm of two minds about it. On one hand, the quicker the greedy bastards get it over with, the quicker my radio might improve, and you guys have stuff to do!

On the other, if they somehow end up running it for 5 years or so, there will be a hand off to the next bunch of clowns thinking they can score, and we all wait in limbo.

If radio were to start healing right now, I honestly think it would be ok. It's very competitive right now, and there are lots of options with new media. Still time to capture the up and coming listeners and do well.

Not sure that will be true in 5 plus years.

That sure doesn't do people much good as we lose both jobs and and a culture / entertainment source for their bad call. Kind of sucks.

Author: Hwidsten
Thursday, April 16, 2009 - 7:32 pm

Well folks, Clear Channel has done it again.

Today they announced the new localism initiative that includes a minimum of 12 public service announcements per day, direct involvement in local organizations by station staff and management, local advisory boards in each market, etc.

Translation: Someone advising Clear Channel who remembers Radio regulation in the bad old days and has some influence has scared the crap out of the boys on Basse Road in San Antonio. No Broadcast company makes such a big deal out of doing what most of us in the business do as a regular part of our programming without a reason.

However, the second shoe has also dropped. CC also announced an initiative called Premium something or other that relates directly to programming. They will be extending their station to station capabilities to do more out of market voice tracking of the better jocks, which means those they don't think are "better" will be out of work, and the "Program Directors" will be relegated to automation baby sitters. If they are going to be a satellite programming company that happens to own a lot of stations, why don't they just say so and be done with it.

Be assured all this will come to an end. The question is how long will it take.

What "former listeners?" Industry fringers and wannabes who post on message boards? The vast majority of people haven't stopped listening. Radio's audience numbers have, if anything, proven robust against the onslaught of new tech.

The thing guys like Del Colliano (and a corrupt FCC) don't get is that "the industry" is not the medium. Radio consolidators may drop like flies this year, but the stations will still be there, the listeners will still be there, and there's a near-endless list of would-be owners waiting for the sale on the courthouse steps. Many of them will be clueless, terrible businessmen who had a rich uncle, but some will be actual broadcasters.

The collapse of CC would not be the end of radio. In fact, at this point one could argue it's in the public interest. I wish the new station owners success in resuscitating the patient.

Author: Semoochie
Friday, April 17, 2009 - 1:50 am

I believe Clear channel used the word "option" or "choice", not "requirement", when it came to sharing programming. I'll see if I can find it.

Author: Roger
Friday, April 17, 2009 - 3:01 am

hmmm.... hedgers to the end......

On one hand..."they announced the new localism initiative that includes a minimum of 12 public service announcements per day, direct involvement in local organizations by station staff and management, local advisory boards in each market, etc.

On the other..."extending their station to station capabilities to do more out of market voice tracking......"

So don't you want a LOCAL known staff to participate in these local orginazations?

Maybe Premiere radio hosts can travel market to market to make appearances at high profile charity events. the local part time promo people and interns can handle the behind the scenes grunt work. Just think of the tax writeoffs they can use when the include the "donated time" for this.

Another Fabulous corporate idea ala "MORE IS LESS"

Author: Newflyer
Friday, April 17, 2009 - 11:18 pm

I can only speak anecdotally and with knowledge of only certain demographic groups, but from what I've seen and heard, people still hear radio, but in many cases they don't like what they hear.

Their MP3 player or computer can play whatever they want on demand, and talk about music is about what's on those MP3 players, not what the radio is playing.

Also, much of this radio listening isn't choice listening, they're hearing it at an establishment where a radio is being used for background music.

Again, these are my observations of others' comments regarding radio, not my own! However, if anyone were to ask me what I felt was the most worthwhile thing to hear on local radio these days, I'd have to say the Lake Oswego Police Blotter and 911 call recordings aired on Bob Miller from time to time.

Author: Hwidsten
Sunday, April 19, 2009 - 7:47 pm

The audience for Radio is still strong. The sameness that people complain about is the lack of talent on individual Radio stations. CC's Premium Policy....to take their best people and put them on the air across the counry...does nothing to solve the "sameness" problem. It adds to it.

Radio ownership has to understand the relationship between the audience and the Radio station to begin the process of creating interest from the audience. If they don't get that, nothing will change and the situation will not improve.

Stations must have an identifiable personality that makes it interesting for the audience to tune in.

Author: Missing_kskd
Sunday, April 19, 2009 - 8:43 pm

People must choose. This is a given.

If they are confused, they will hesitate to choose, refuse to choose, or choose for poor reasons.

Differentiators are those things we use to identify choices and their potential value proposition. Positioners are there to reinforce these things and frame the value discussion.

If a very large chunk of radio sounds "the same", then there are few differentiators, therefore little value, and that mess is difficult to position.

Result: Lousy choices, or the choice not to choose.

Author: Tomparker
Sunday, April 19, 2009 - 9:26 pm

Hal, the "bean counters" need to be able to quantify radio in every aspect. A fool's errand, to be sure when it comes to how an a great talent bonds with the audience or how an accomplished salesperson can relate to their client and act as an ombudsman on their behalf.

The need to quantify the unquantifiable had it's start in the 80s with research as the "holy grail" for the bankers. Used properly it can be great tool for guiding (not cementing) playlists; effective air work, not so much.

What's next? Diagramming an on air joke? Predicting airstaff "chemistry"?

Author: Missing_kskd
Sunday, April 19, 2009 - 9:31 pm

I would not be surprised in the least to see it in the pipe somewhere, with a batch 'O Powerpoints talking about the ROI in ONLY SIX MONTHS, and to get started, IT FITS ON A CREDIT CARD!

(some clown is trying that, you just know it)

There is a system for automating stories. It will supposedly generate daytime TV quality stories from very little supporting information. A drama engine... I have forgotten the link, but when I read about the code, I was just amazed that somebody was working that hard on normalizing what is supposed to be an art.

Yuck.

This kind of crap comes from the same kinds of people that call other people resources instead of people. Generic-afy the process and you get mediocre results.

Can't tell them that though.

Author: Alfredo_t
Monday, April 20, 2009 - 9:39 am

> A drama engine...

In 1984, the lyrics to sappy love songs were generated by "kaleidoscopes." When I read that, I thought that Orwell was way off on predicting that machines would be capable of doing something like that. Now, I might find myself proven wrong!

Author: Rongallagher
Monday, April 20, 2009 - 4:52 pm

So we can look forward to a future where a drama engine writes the material for a digital voice to announce...

Author: Notalent
Monday, April 20, 2009 - 8:34 pm

That would be the "Content Engine"

Author: Missing_kskd
Monday, April 20, 2009 - 9:49 pm

Heck, just make the voice digital too.

We are within 5 years, or less of that being virtually indistinguishable from ordinary people, on technical merits.

Scroll this if you want. You have been warned... I'm in a mood.

-----------------------------------------------

After reading and participating in the conversation here for as long as I have, I've become aware of a few things. Some of this is old hat, some of it might be considered bizzare, whatever. I'm just gonna post it like I usually do, largely because if I get it out, I solidify it and that is good.

To start, the reason I'll sit here and write something has always confused me. The mere release can happen lots of ways, and it does not have to happen here.

So, what is special about here? I know you guys, and you know me. Whether we like one another is a different (and likely enlightening and entertaining) topic. The key is that we know one another.

I've tried doing this in a word processor, and it's not quite the same. When the browser window is open, it's like I can see some of you and am speaking to you.

Different words come out because of that!

Why?

The simple answer is that I am speaking to somebody as opposed to just writing about something. There is then an audience, and with that comes the sharing and drama that compels many of us to step up and entertain, or communicate in earnest.

People matter in this way.

I've given many presentations. When I do them to groups I don't know, I don't do them the same way. They are guarded and lack the potency they could have.

When I meet and greet the folks before hand, I get to know some of them, and that matters. When I go to present, it's different! There is a spark, and that spark comes from simple human communication. Talking to my buddy Bob, from California, who I just met and his kid has the same name mine does, is different than just talking.

(or writing in this case)

A drama, or content engine would try to do what we do. What is it that we do exactly?

We consume content elements, mix it with our own experiences (which is just another content element really), stir in emotion and lay it out along a theme to form a story.

(and that's the KSKD secret sauce BTW. My presentations are always good, the stuff I sell, or educate people on, or support them on, always sells, always teaches, and is always a good work experience)

You radio guys know this cold, of that I am sure. Frankly, the discussions here have improved this element of me more than any of you would ever, ever know.

Thought I would share some back.

(continued)

Author: Missing_kskd
Monday, April 20, 2009 - 9:59 pm

Scroll this one too, if you are so inclined!

Now then, what I have come to realize is that there are minds, mediums and content.

When two minds touch, that is communication, and that happens via a medium. Could be radio, could just be taps on a wall like the prisoners of war used to do. If you read about those guys, they got to know one another as well as any of us would, despite not ever having seen one another, or not seeing them often.

(this forum works in that same way, if you let it)

Minds get lonely. Minds need to work together. Minds feel attraction, and other human needs.

This is drama basically. It's all about our adventures in achieving these needs. Sometimes it's easy, some times it's tough. Sometimes we fail, sometimes we succeed.

As simple people, we all find other people interesting, maybe attractive, maybe repulsive, but always interesting. We can detect a mind through just about any medium, no matter how limited. And that's important because...

WE KNOW WHEN THERE IS NO MIND BEHIND THE CONTENT.

No mind, no spark, period.

It used to be this was valuable. Why? Because content was not easily distributed. Music used to be very special because it had to be performed to be heard. Then we got recordings, and those were tough too, so only some of us did the recording, and the others found hearing them valuable.

Now anybody can record, and the value is less. Anyone can obtain large volumes of music, and the value is less.

All music radio was then a very nice value. Get to hear the tunes, deal with the ads, and the low cost and high availability mattered! New music was always a treat, and most people heard about new music that way.

Those days are gone, with music now just another content element as stated above.

Back to minds then.

Minds are always valuable! This is because we ALWAYS find them interesting. We do this quite simply because we are never, ever quite sure what they are going to do, or what we can learn from them.

(continued)

Author: Missing_kskd
Monday, April 20, 2009 - 10:11 pm

Scroll it...

So there is a human element in everything!

Where that element is missing these days, there is almost no value because the elements are widely available and cheap.

What this means is that for there to be value in the programming, and I'm using that in a very general context... could be a presentation, authored written work, theatre, etc... the minds work product --drama, must be present so that the consumer of the programming can relate to or identify with that mind.

That is the seed of loyalty, BTW. We are not loyal to machines --we are loyal to the great minds behind the great machines.

When minds connect, a loop is closed. It's not important that the minds actually interact. It is enough that the receiver mind, in the case of a program on the radio, can know of the sender mind, and potentially communicate! Call it in, write a letter, hear others communicating and know it's possible, write an e-mail, or meet them at the street corner for the street gig next Saturday.

In all of those cases, whether or not the listener actually engages in the communication, the loop is closed.

And closing that loop is the ONLY WAY we get that spark that is special, that has value, that can be "cool".

People do that, and other people affirm it, identify with it, and are entertained or enlightened by it.

A machine that is realized in such a way as to perform that task is really a very complex medium, where our perception of the actual mind behind things is very diluted --maybe not detectable. We are good at that, but not perfect.

So then, some of the people can be fooled some of the time.

That is the suckers bet the big business is trying to profit from. IMHO, they will fail because the potency of this is weak, very diluted and it's not really possible to close the loop.

It's all about the mind and whether or not we can see it well enough to appreciate it. That is where all the value in communication is.

This is so valuable that we will record it, others will talk about it, we crave it, want to share it, and are willing to put out significant effort to experience it.

Until our machines can act like minds, really all they are is recording devices. Because some of the people can be fooled some of the time, firing one of these up will rope in some and they will be entertained for a while.

It fades because there is no mind there with a will to make SURE IT DOES NOT FADE.

It is that simple really.

(continued)

Author: Missing_kskd
Monday, April 20, 2009 - 10:25 pm

Scroll it...

Every good thing that makes money boils down to addressing a human need. That is where value comes from, nothing else.

Think about it, if we don't need it and don't covet it, what value does it really have?

(maybe somebody else covets it? Fair enough. There is value in that!)

In this day then, just playing music only has value when there is no other way to get it! That has always been the case, but it's painful now, because it's nearly always possible to get music now!

People, on the other hand, are valuable because of who they are. Once we identify with a person, we have familiarity maybe loyalty and we see value in that because they are a story, and we want to see what happens next!

Put the people on the radio. Use the machines to help them, not replace them.

That is something that has value, and that value can be sold, built upon and profited from.

Of course, that means needing people, but that's just how it is.

In the highly corporate environment where I work, there is a lot of pressure to turn everything into generic and non-people related terms. This is so generic solutions can be applied to get results more of the time.

Of course, those results are as generic as the Orwellian language is. "human resource" is double speak for that person that has value, but that others don't want to recognize.

Why?

Because they then NEED that person, and where you need something from somebody, you are accountable to that somebody. In the case of the person, that means actually paying them, in recognition for that which they bring to the table.

Eliminate that, and the idea is that ANYBODY can bring it to the table, so who is the cheapest and least needy?

Sound familiar?

Thought so.

That's it really. If there is a mind behind the stuff people hear on the radio, then there is value inherent in that stuff they hear on the radio.

Same for a lot of things.

IMHO, this is ideological. Radio is getting hit hard because a very, very large fraction of it's value lies in the people who can communicate, add value, tell stories and present as that mind that others find value in.

But, this is everywhere there is big business. The reason is that they can't scale to be that big, without having de-humanized things. There is a cost to that, felt acutely here.

I feel it, you all feel it, yet we look at the stocks and feel connected to that, as if that matters more than people do.

Frankly, I've come to learn that it does not. We might live less, have to move, have fewer things, but at the end of the day, basic human things matter more than the best process or the most dollars.

Maybe it would be good for a lot of it to fail. People could pick up the pieces, build community again, and live for a long while knowing what "too big to fail" really means.

What I think it means is that somewhere in there, the reason for doing and building is not for the dollars, but to make our lives better in some way. When the human elements are removed, or worn down to the bare nubs, like the fake greeting your grocer now gives you after reading your name, forcefully pried from you with price discrimination in the form of a "rewards program", it all seems a bit hollow and useless.

So, we think we will just go and buy it from the smaller store, where Joe the guy that runs the store, might remember who you are, and that if he puts the big size on the shelf, you will gladly buy that one for a small premium.

Oh yeah. Forgot. There are no little stores anymore. Only the big ones, where if you sell yourself, they will give you a deal!

Edit: I reached an impasse as to how to wrap up the story. And perhaps that is good. I don't have a solution, but I do understand where value is, how it's created and other things. Many of you do too, and have GOT to be frustrated as hell about the state of it.

So then, "I wish it would fail" really isn't accurate. That would hurt a ton of people. Better said as I wish we could structure things to give entrepreneurial people a break against big business, who has all but snuffed out the opportunities we need to be there, so that people are adding value and that value benefits the community they live in, more than it does some other, almost not connected one.

If the human elements I just posted are, in fact, valuable, then those self-starters, given some room, will compete very nicely. I would welcome some of that about now. Many people would.

The analogy there to radio should be obvious.

--->If you read this. Thanks for reading. Many of you here are great people, who have shared stuff, in bits here and there. Over time it adds up. Thanks for that, and thanks for forgiving this rant.

--->If you scrolled it. All good. I posted the scroller right at the top for you, proper.

Cheers!

Author: Roger
Tuesday, April 21, 2009 - 3:40 am

Excellent analysis as usual. Now, who forwarded this to the people who REALLY need to read it?

and the bigger question....

how do you get them to give it consideration.

The one comment that stands out for me is

...from the same kinds of people that call other people resources instead of people......

That in itself devalues the contribution of an individual..... With a pool of human resources, you only see the end result. The weaker links pull down the outstanding performers to an "AVERAGE". The corporate TEAM concept judges the whole on a predetermined standard. So many time the term TEAM player is used, with no meaning. Try to stand out, innovate, and excel within your title, and you are NOT a team player. The idea of CUBICLES, narrow focused job duties, contribues to mediocrity. You have to allow people to expand, grow and shine. Recognize the go getters.

Some people are happ to go to work and do the same thing every day. It's a comfort zone and there is a place for them. You also have to have a mix of restless creative types to stir the pot. The corporate world tends to shy away from having these types in house. They are recognized as disruptive... too bad. Hence the "sameness" No fire no spark.

Author: Hwidsten
Friday, April 24, 2009 - 7:57 pm

You guys are getting it.

Let me try to boil it down to a few words.

If all the music is available to everyone and all the signals are equal, it is the ability of a live person on the air to communicate information and emotion that attracts people to listen to what is coming out of the speaker and feel involved with it. That's what eliminates the "sameness." That's what builds the audience and station loyalty.

The problem is that you can't, as Tom says, analyze every joke to determine what's funny about it. Sometimes it is the fact that the joke isn't funny that makes it funny. A guy named Johnny Carson made a career out of that.

And did you ever notice that Johnny Carson as a broadcaster presided over the show, rather than begging for laughs as Letterman and Leno do?

Author: Missing_kskd
Friday, April 24, 2009 - 9:16 pm

Yes I did notice, and do notice. (We've been watching a Carson set I picked up for my father in law. He's 74.)

Loved Carson. Still do.

Leno and Letterman are a facade by comparison.

Carson told a wonderful story to us each and every night. We were sad and felt empty when the book closed and the story was over.

"The Tonight Show" is the place where the story was told. The story was Carson, the value was Carson.

We miss Carson. We don't miss "The Tonight Show".

Author: Missing_kskd
Saturday, April 25, 2009 - 9:33 am

"Also, much of this radio listening isn't choice listening, they're hearing it at an establishment where a radio is being used for background music."

This "non-choice" listening is also augmented by "least of evils" listening. There are times when there are not many alternatives. Radio gets chosen.

I don't see that changing significantly anytime soon.

That is the nut that radio can build from. All it takes is a few good experiences and the movement goes the other way.

No matter what anybody says, there are an awful lot of radios in service, and they are always free, but for a power source, and that means people will always pick them up, twiddle the dial to find the cool and enjoy.

So then, if the "cool" is broadcast, things will pick up slow and steady, until expectations reset.

"Cool" only comes from people. Put the people on the radio, let them be "cool", use the machines to help them, not replace them.

BTW: I am absolutely not opposed to using all these powerful networks to move content around. The idea of the "Radio Show" seriously needs to come back. Having live people adds a lot of value, but does not have to be the sole source of value.

If it were me, I would mix the two, for a nice blend.

Pull "shows" from places, have the announcer tie them together, and produce a show or two to localize things. Given the networks today, that seems to be the best overall leveraging of all the tech.

Look at KPOJ and their "I heart Radio" application. Very well done guys. We need more of it. That model is damn near perfect.

So people are saying, "That's talk". And right they are! Talk.

Why does talk work? Let's look at the elements:

Daily Relevance. The material aired connects to our lives each day.

Drama. You just can't make the stuff up that happens in politics.

Expectations Set. Truth is, most talk stations manage their listener expectations very well. You tune, you know who you are going to get, when and why. That's golden.

Differentiation. Talkers are highly differentiated from music stations, and often each other. Makes for clear choices.

Apply that to a music, or dare I say it, Variety station (which may contain drama, music and talk), and that's going to stand out from the "all the hits, all the time" deal, IMHO.

The networks we have today, present opportunities to repurpose content multiple times. They also present opportunities to leverage people multiple times and in multiple places. No reason not to do that.

It's out there, meaning somebody is gonna do it, so game over. Embrace it, leverage it, differentiate off of it, and it's game on!

ANY movement down these paths, and other paths mentioned here, will pick up steam because there are always plenty of people sampling because the radios are there, and they find time to check them out.

Over time, people will forgive, and expectations will come in line with reality, and the movement builds steam.

The Internet has this, but Sat. radio does not. Should be a slam dunk, given the management issues are off the table.

Author: Missing_kskd
Saturday, April 25, 2009 - 11:36 am

One other element that just occurred to me as I was programming my micro controller this morning.

(that's a little, single chip computer)

Emotional content. Talk stations resonate emotionally. You might seriously agree and want the affirmation, or you might just get pissed as all get out! Both are very good things --stimulating things!

Stimulating enough to power through the spots and hear "the rest of the story".

So tell me this then:

If music is the language of emotion, then why the heck are we not telling good, emotional stories and painting moods with our music?

The concept of "the radio show" doesn't have to be some person blabbing all the time. It can be themed programming.

Lights out, cocktail mix at 6, chill show, oldies but goldies, Passport Approved, all are shows that run at times and do specific things. Expectations are set on those. People know what they are going to get, and choose it when they want it.

This could be expanded on, with more story content, instead of genre or geographical content.

Light talk, ADs that fit the mood, and themes, stories! Music that blends, like a good album blends. When done well, this is sweet stuff!

I know the standard answer is probably, "costs too much", or "takes people", or some other damn thing.

But, with the powerful networks, why not? If more of these were produced where it makes sense, and that could be your spare bonus room (seriously), then stations could plug them in to differentiate with, depending on their market and what their research says are good differentiators are.

"All hits all the time" is like the Roger classic: "All Gimmicks All The Time".

For those workday listeners that would be cool beans. When I get the luxury of enjoying some talk during the workday (which isn't often because I'm either out, dealing with people, or something...) it breaks the day into nice little chunks I can look forward to.